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Overall 2026 February Term Financial Results

• Total revenue was 81.374 billion yen, 99.7% of the prior year level, which broadly matched the prior year amid declining consumer sentiment from high inflation, expanding demand for high-unit electric power-assisted bicycles, and longer replacement cycles for bicycles.
• Gross profit was 38.791 billion yen (100.1% of prior year), with a gross margin of 47.7%, improving 0.2 percentage points year-over-year. While the rising composition share of lower-margin electric power-assisted bicycles put downward pressure on margin, purchasing cost reduction efforts offset this impact to deliver margin improvement.
• Operating profit was 3.937 billion yen (71.8% of prior year), ordinary profit was 4.169 billion yen (74.1% of prior year), and net profit was 2.268 billion yen (63.8% of prior year).
• Selling, general and administrative (SG&A) expenses reached 104.8% of the prior year level. While wage hikes and workforce expansion for business growth increased personnel costs, proper workforce allocation and productivity improvements kept the actual increase lower than the initial plan of 108.5% of prior year, holding it to 105% of the prior year level.
• Capital expenditure decreased year-over-year, driven by lower office-related investment.

Profit Change Drivers

• Weak new bicycle sales pulled operating profit down by 103 million yen.
• Offset factors added 155 million yen to operating profit, led by cost reduction efforts centered on the company's Taiwan office, and growth in the after-sales service segment from higher demand for repairs and parts.
• SG&A expenses increased by 1.599 billion yen year-over-year, driven by wage hikes, new store opening costs, and the impact of core system renewal.

Store Network Updates

• 15 new stores were opened, and 3 stores were closed upon lease expiration. As of the end of the term, the total store count reached 557, including 539 directly operated stores and 18 franchise stores.

Deviation from Initial Full-Year Forecast

• Revenue exceeded the initial full-year forecast thanks to enhanced sales promotion activities. However, the rising sales share of electric power-assisted bicycles pulled overall gross margin below forecast.
• While the company worked to control SG&A expenses, the high proportion of structural costs such as personnel and logistics costs prevented large-scale cost cuts.
• A conservative profitability assessment for underperforming stores led to increased store impairment losses, resulting in a 371 million yen negative impact that pushed net profit below forecast.

• The 2027 February Term is the first year of the company's new medium-term management plan, and is positioned as a preparatory run-up phase for achieving long-term targets.
• Total revenue is forecasted to reach 86.2 billion yen, 106% of the prior year actual result. Gross profit is forecasted at 41.6 billion yen (107.3% of prior year), with a planned gross margin of 48.2%, supported by ongoing cost reduction efforts and rising composition share of higher-margin repairs, maintenance, and parts.
• Operating profit is forecasted at 4.3 billion yen (109.2% of prior year), ordinary profit at 4.44 billion yen (106.5% of prior year), and net profit at 2.73 billion yen (120.3% of prior year).
• Total SG&A expenses are planned at approximately 37.3 billion yen, 107.1% of the prior year. Personnel expenses are planned at approximately 17.8 billion yen (107.1% of prior year), as the company implements its third consecutive round of wage hikes to secure talent for business expansion and develop specialized human resources.
• Capital expenditure is planned at approximately 2.5 billion yen, focused on store expansion and growth foundation investments: 10 new stores are planned to open, 17 existing stores will be renovated or relocated. End-of-term total store count is forecasted to reach 567 (549 directly operated, 18 franchise).
• The company targets a 26% unit market share across the overall bicycle industry, driven by growth in wholesale and reused bicycle segments in its peripheral business areas.
• Key strategic initiatives for the term include strengthening CRM to deepen customer relationships and expand service areas such as inspections and car washes; continuing to push OMO initiatives (opening urban stores, expanding EC offerings, improving shopping convenience) to raise customer experience value; advancing manufacturing cost reduction and price correction for Asahi brand products; and using digital and IT-enabled operational efficiency to improve productivity.

By sales channel:

1. Store sales: 64.918 billion yen, 97.4% of the prior year level, contributing 79.8% of total company revenue.
2. EC sales: 14.29 billion yen, 112.5% of the prior year level, contributing 17.6% of total company revenue; the EC penetration rate rose 2 percentage points to 18% from 16% in the prior year. By product category:
3. Electric power-assisted bicycles: Sales reached 105.6% of the prior year level, driven by strong growth of the company's private brand "Enasis"; Asahi brand products maintain a 47.4% revenue contribution share, remaining at a high level. This high-unit, lower-margin category saw its revenue composition share increase year-over-year.
4. Repair and parts: Sales increased year-over-year amid soft new bicycle sales, with higher demand driving growth in the after-sales service segment.

• Persistently high inflation has led to declining consumer sentiment, which has softened demand for new bicycle sales.
• Longer replacement cycles for high-unit electric power-assisted bicycles have suppressed near-term new unit sales volumes.
• Structural cost increases for personnel and logistics limit the company's ability to achieve large SG&A expense cuts.
• Yen depreciation creates upward pressure on procurement costs, which acts as a negative factor for gross profit performance.

Q: Regarding the full-year plan for the 2027 February term, when will the noted price correction take effect, how much will it contribute to performance, and what impact will the April 2026 revision of the Road Traffic Act have on Asahi's business?

A: We cannot share specific details about the timing of price correction at this time, but we plan to implement the adjustment at some point in the first half of the fiscal year. Price correction for us is not merely passing through cost increases; it is positioned as a necessary adjustment to support employee compensation and working environment improvements, which in turn allows us to maintain our retail network and deliver safe, secure bicycle lifestyles for consumers. While we will not share detailed impact figures here, the 6% planned revenue growth for the 2027 term already incorporates the expected impact of this price adjustment. Regarding the Road Traffic Act revision that took effect April 1: We recognize that the revision highlights existing issues with bicycle rule compliance and rider etiquette, as many users have not fully understood or followed existing traffic rules and etiquette. We expect the stricter regulations coming into effect will raise user safety awareness. Across the industry, this is an opportunity to address the long-standing issue of poor compliance, and we plan to push additional initiatives to improve rider etiquette and build a better overall social environment for bicycle use.